Hey Jay,
Hope you've had your coffee...

Two weeks ago, the very day of the London terror threat announcement,
September Unleaded gas futures dropped 18 cents per gallon so I jumped and
bought 2 semi loads. I paid $2.789 which includes all of the fed and state
taxes. Yesterday, the futures dropped 5-6 cents to close 14 cents lower
than the close the day 2 weeks ago... So I figure, time to buy again! I had
room for one more semi load. I had to pay $2.762. Current NYMEX Sept
futures are $1.845 per gallon, the difference is basis, freight, and tax.

While the futures dropped 14 cents during the past two weeks, basis has
gotten very expensive and terminal prices only dropped 2.7 cents.

I get a newsletter on the fuel markets twice a week.... here are some
comments taken from that.

The Alaska pipeline problem was a news event waiting for something more
spectacular to happen. It's a nothing deal. The volume that the pipeline
contributes to America's usage is rather small and it only goes to
refineries on the left coast. Mexico and Venezuela stepped up to the plate
and filled in any shortage. The big news was that the terror threat poked a
hole in the fuel bubble by questioning how much fuel the airlines would be
using. With refined product inventories high, draws on crude inventories
low, refinery utilization very high, driving season coming to an end, Mexico
stepping in to fill crude shortages in the west... the Alaska pipeline
problem simply couldn't hold the markets up.

In all actuality the prices currently seen dropping at the pumps are the
trickle down reaction to the lower terminal prices that have been dropping
for the past 2 weeks, initiated by the London terrorist scare and builds in
inventory levels.

Last week both refined and crude inventories were at the highest levels in
several months and higher than this time last year. There is still good
summer driving demand, although it's starting to wane and prices will also.
This is typical for this time of the year. Look for lower prices at the
pumps during the following weeks.

Jim